CVS Health (CVS) Valuation: Analyst Upgrades and Earnings Momentum Spark Fresh Look at Future Upside

Recent Momentum Shifts for CVS Health: What’s Moving the Stock?

If you are tracking CVS Health (CVS) lately, you have probably noticed the uptick in market chatter around its shares. In the past few weeks, a mix of upbeat analyst coverage and a wave of positive earnings estimate revisions has drawn investor attention. Add to that a handful of new contracts, steady partnerships, and resilient business growth, and it starts to feel like investors are reconsidering what CVS can deliver.

These developments are playing out against a backdrop of strong performance, with shares moving up more than 29% in the past year, reflecting growing confidence in CVS’s fundamentals. Short-term momentum is also building, with gains coming in across the past month and quarter. While the Omnicare subsidiary’s bankruptcy could have raised concerns, it appears investors are more focused on the core strengths and future earnings potential of CVS. When you stand back, the moves follow a series of news stories that tilt toward improved earnings power and an attractive relative valuation.

So, with all this momentum and confidence in its future, is CVS Health a bargain at current prices or is the market already pricing in the next phase of growth?

Most Popular Narrative: 26% Undervalued

The latest narrative signals that CVS Health is trading well below its estimated fair value, raising the prospect of meaningful upside if company forecasts are realized.

CVS Health’s HCB operations have demonstrated strength in net investment income. The income increased sharply by 46.3% YoY to $300 million in Q2 2024, and for H1 2024, net investment income jumped by an even wider 77% to $653 million in 2024. This significant increase in investment income points to CVS Health’s strong portfolio management capabilities to generate returns from its financial assets. However, the rising interest rate environment in H1 2024 has likely contributed to this surge, enabling the company to boost its earnings through higher investment yields.

Want a behind-the-scenes look at what is driving CVS’s sky-high fair value? The answer lies in some bold long-term projections for profits and revenues that most investors are still overlooking. Curious which core metric could unlock serious upside if trends continue? Discover what could push CVS’s valuation far above current levels. The numbers might surprise you.

Result: Fair Value of $103 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, new uncertainties around leadership changes and rising medical costs could challenge CVS Health’s turnaround. These factors may test investor patience with its current valuation.

Find out about the key risks to this CVS Health narrative.

Another View: What Do Market Comparisons Reveal?

While our first look found CVS Health undervalued by discounted cash flow, a simple comparison to similar healthcare firms tells a different story. This alternative method suggests the stock may not be the bargain it appears. Which perspective should investors trust?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding CVS Health to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own CVS Health Narrative

If you want to look deeper or see the numbers from your perspective, you can quickly create and share your own take in just a few minutes. Do it your way.

A great starting point for your CVS Health research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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